The tax authority has begun issuing P800 letters as it works through millions of PAYE records to identify taxpayers who have either paid too much or too little income tax.
The review could be particularly significant for the UK’s estimated 700,000 umbrella workers, who may move between assignments, umbrella companies and other PAYE employers more frequently than conventional employees.
HMRC acknowledges that changing jobs can result in workers paying the wrong amount of tax, while incorrect tax codes can also leave taxpayers out of pocket.
Overpayments are being prioritised, meaning those owed money should be contacted first.
But workers expecting an automatic windfall have been warned to check the small print.
HMRC has changed the process for most workers seeking refunds covering multiple tax years. Once a repayment has been processed, taxpayers may now need to actively request the money rather than simply waiting for it to arrive.
The warning comes after more than 730,000 tax refunds went unclaimed last year, with the average repayment standing at £855.
Seb Maley, chief executive of Qdos, said: “HMRC is reviewing the taxes 45 million people and the UK’s estimated 700,000 umbrella workers should pay particularly close attention. Moving between assignments and PAYE employers means there can be more changes to keep track of. HMRC itself recognises that starting and finishing jobs can result in people paying the wrong amount of tax. So if you work flexibly, don’t assume your tax position is automatically correct.
“And crucially, being told you’re owed money by HMRC doesn’t always mean it will simply land in your account. Depending on the circumstances, you may still need to actively claim it. More than 730,000 refunds went unclaimed last year, averaging £855. If you receive a P800, check the figures carefully, follow HMRC’s instructions and make sure you claim anything you’re owed.”
For those who have underpaid, HMRC will generally seek to recover the outstanding tax automatically through PAYE.
The reconciliation process is expected to continue until November 2026, leaving millions of workers with months of potential tax adjustments ahead.
HMRC has also reiterated a basic fraud warning: it will never ask taxpayers to claim a refund by responding to a text message or email.
For workers receiving a P800, the message is therefore simple: check the numbers, check the tax code — and don’t leave money owed to you sitting with HMRC.
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